SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended 9/30/99 Commission File No. 0-15950
FIRST BUSEY CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 37-1078406
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
201 West Main Street
Urbana, Illinois 61801
------------------------------- -------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (217) 365-4556
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the practicable date.
Class Outstanding at October 31, 1999
- ---------------------------------------------------------------------------
Class A Common Stock, without par value 13,549,384
Page 1 of 24
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Page 2 of 24
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, 1999 December 31, 1998
------------------ -----------------
(Dollars in thousands)
ASSETS
Cash and due from banks $ 27,686 $ 35,644
Federal funds sold 24,700 -
Securities available for sale (amort. cost 1999 $218,625; 1998 $207,531) 224,164 217,991
Loans (net of unearned interest) 735,495 662,281
Allowance for loan losses (7,854) (7,101)
------------ ------------
Net loans $ 727,641 $ 655,180
Premises and equipment 24,529 24,232
Other assets 22,323 18,484
------------ ------------
Total assets $ 1,051,043 $ 951,531
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $ 93,080 $ 96,555
Interest bearing 792,990 730,149
------------ ------------
Total deposits $ 886,070 $ 826,704
Short-term borrowings 31,176 5,900
Long-term debt 41,000 25,000
Other liabilities 7,111 6,824
------------ ------------
Total liabilities $ 965,357 $ 864,428
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 21,654 21,283
Retained earnings 64,265 59,028
Unrealized gain (loss) on securities available for sale, net 3,343 6,799
------------ ------------
Total stockholders' equity before treasury stock, unearned ESOP
shares and deferred compensation for stock grants $ 95,553 $ 93,401
Treasury stock, at cost (9,452) (5,865)
Unearned ESOP shares and deferred compensation for stock grants (415) (433)
------------ ------------
Total stockholders' equity $ 85,686 $ 87,103
------------ ------------
Total liabilities and stockholders' equity $ 1,051,043 $ 951,531
============ ============
Class A Common Shares outstanding at period end 13,577,235 13,704,938
============ ============
Page 3 of 24
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, 1999 September 30, 1998
------------------ ------------------
(Dollars in thousands)
ASSETS
Cash and due from banks $ 27,686 $ 35,057
Federal funds sold 24,700 27,950
Securities available for sale (amort. cost 1998 $218,625; 1998 $215,163) 224,164 224,423
Loans (net of unearned interest) 735,495 634,043
Allowance for loan losses (7,854) (7,306)
------------ ------------
Net loans $ 727,641 $ 626,737
Premises and equipment 24,529 24,611
Other assets 22,323 19,772
------------ ------------
Total assets $ 1,051,043 $ 958,550
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $ 93,080 $ 85,829
Interest bearing 792,990 738,187
------------ ------------
Total deposits $ 886,070 $ 824,016
Short-term borrowings 31,176 15,550
Long-term debt 41,000 25,000
Other liabilities 7,111 7,888
------------ ------------
Total liabilities $ 965,357 $ 872,454
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 21,654 21,253
Retained earnings 64,265 57,708
Unrealized gain (loss) on securities available for sale, net 3,343 6,016
------------ ------------
Total stockholders' equity before treasury stock, unearned ESOP
shares and deferred compensation for stock grants $ 95,553 $ 91,268
Treasury stock, at cost (9,452) (4,578)
Unearned ESOP shares and deferred compensation for stock grants (415) (594)
------------ ------------
Total stockholders' equity $ 85,686 $ 86,096
------------ ------------
Total liabilities and stockholders' equity $ 1,051,043 $ 958,550
============ ============
Common Shares outstanding at period end 13,577,235 13,770,330
============ ============
Page 4 of 24
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
1999 1998
--------- --------
(Dollars in thousands,
except per share amounts)
INTEREST INCOME:
Interest and fees on loans $ 42,930 $40,331
Interest and dividends on investment securities:
Taxable interest income 6,900 7,958
Non-taxable interest income 1,445 1,280
Dividends 95 101
Interest on federal funds sold 175 729
--------- --------
Total interest income $ 51,545 $50,399
--------- --------
INTEREST EXPENSE:
Deposits $ 21,962 $22,841
Short-term borrowings 834 901
Long-term debt 1,300 892
--------- --------
Total interest expense $ 24,096 $24,634
--------- --------
Net interest income $ 27,449 $25,765
Provision for loan losses 900 700
--------- --------
Net interest income after provision for loan losses $ 26,549 $25,065
--------- --------
OTHER INCOME:
Trust $ 2,983 $ 2,591
Commissions and brokers' fees, net 1,071 927
Service charges on deposit accounts 2,554 2,212
Other service charges and fees 1,621 1,412
Security gains, net 696 727
Trading security gains, net (1) 5
Net commissions from travel services 838 651
Gain on sales of pooled loans 759 656
Other operating income 810 753
--------- --------
Total other income $ 11,331 $ 9,934
--------- --------
OTHER EXPENSES:
Salaries and wages $ 10,776 $10,168
Employee benefits 2,076 1,929
Net occupancy expense of bank premises 2,009 1,919
Furniture and equipment expenses 2,505 1,581
Data processing 553 1,474
Stationery, supplies and printing 651 513
Amortization expense 826 1,038
Other operating expenses 4,446 3,786
--------- --------
Total other expenses $ 23,842 $22,408
--------- --------
Income before income taxes $ 14,038 $12,591
Income taxes 4,287 3,890
--------- --------
NET INCOME $ 9,751 $ 8,701
Other comprehensive income, before tax:
Unrealized gains on securities:
Unrealized holding gains (losses) arising during period (4,226) 1,060
Less reclassification adjustment for gains included in net income (696) (727)
--------- --------
Other comprehensive income, before tax ($4,922) $ 333
Income tax expense related to items of other comprehensive income (1.465) 118
--------- --------
Other comprehensive income, net of tax ($3,457) $ 215
--------- --------
COMPREHENSIVE INCOME $ 6,284 $ 8,916
========= ========
BASIC EARNINGS PER SHARE $ 0.71 $ 0.63
========= ========
DILUTED EARNINGS PER SHARE $ 0.70 $ 0.62
========= ========
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $ 0.33 $ 0.29
========= ========
Page 5 of 24
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
1999 1998
--------- --------
(Dollars in thousands,
except per share amounts)
INTEREST INCOME:
Interest and fees on loans $15,071 $13,781
Interest and dividends on investment securities:
Taxable interest income 2,445 2,683
Non-taxable interest income 495 433
Dividends 30 32
Interest on federal funds sold 17 133
-------- --------
Total interest income $18,058 $17,062
-------- --------
INTEREST EXPENSE:
Deposits $ 7,620 $ 7,760
Short-term borrowings 503 327
Long-term debt 520 296
-------- --------
Total interest expense $ 8,643 $ 8,383
-------- --------
Net interest income $ 9,415 $ 8,679
Provision for loan losses 300 50
-------- --------
Net interest income after provision for loan losses $ 9,115 $ 8,629
-------- --------
OTHER INCOME:
Trust $ 933 $ 808
Commissions and brokers' fees, net 352 334
Service charges on deposit accounts 995 771
Other service charges and fees 572 459
Security gains, net 230 194
Trading security gains, net - 5
Net commissions from travel services 244 207
Gain on sales of pooled loans 239 272
Other operating income 255 232
-------- --------
Total other income $ 3,820 $ 3,282
-------- --------
OTHER EXPENSES:
Salaries and wages $ 3,632 $ 3,410
Employee benefits 681 620
Net occupancy expense of bank premises 695 696
Furniture and equipment expenses 936 568
Data processing 200 513
Stationery, supplies and printing 187 163
Amortization expense 239 352
Other operating expenses 1,474 1,264
-------- --------
Total other expenses $ 8,044 $ 7,586
-------- --------
Income before income taxes $ 4,891 $ 4,325
Income taxes 1,437 1,336
-------- --------
NET INCOME $ 3,454 $ 2,989
======== ========
Other comprehensive income, before tax:
Unrealized gains on securities:
Unrealized holding gains (losses) arising during period (723) (527)
Less reclassification adjustment for gains included in net income (230) (194)
-------- --------
Other comprehensive income, before tax (953) (721)
Income tax expense related to items of other comprehensive income (76) (251)
-------- --------
Other comprehensive income, net of tax (877) (470)
-------- --------
COMPREHENSIVE INCOME $ 2,577 $ 2,519
======== ========
BASIC EARNINGS PER SHARE $ 0.25 $ 0.22
======== ========
DILUTED EARNINGS PER SHARE $ 0.25 $ 0.21
======== ========
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $0.1100 $0.1000
======== ========
Page 6 of 24
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
1999 1998
----------- ----------
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 9,751 $ 8,701
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 3,293 2,863
Provision for loan losses 900 700
Decrease in deferred income taxes (774) (813)
Amortization of investment security discounts (96) (110)
Gain on sales of investment securities, net (696) (727)
Proceeds from sales of pooled loans 77,232 59,746
Loans originated for sale (68,103) (67,016)
Gain on sale of pooled loans (759) (656)
Loss(gain) on sales and dispositions of premises and equipment 20 (10)
Change in assets and liabilities:
(Decrease) in other assets (2,258) (237)
Increase in accrued expenses 365 1,024
Increase (decrease) in interest payable 27 (149)
(Decrease) increase in income taxes payable (105) 522
----------- ----------
Net cash provided by operating activities $ 18,797 $ 3,838
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities classified available for sale $ 5,978 $ 31,453
Proceeds from maturities of securities classified available for sale 80,244 75,565
Purchase of securities classified available for sale (96,524) (114,759)
(Increase) in federal funds sold (24,700) (9,150)
Increase in loans (81,901) (23,439)
Purchases of premises and equipment (2,790) (3,581)
Proceeds from sales of premises and equipment 26 25
Cash acquired in acquisition of Busey Carter Travel, Inc. - 204
----------- ----------
Net cash (used in) investing activities ($119,667) ($43,682)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in certificates of deposit 54,043 ($19,995)
Net increase in demand, money market and saving deposits 5,323 32,558
Cash dividends paid (4,514) (4,004)
Purchase of treasury stock (4,249) (1,483)
Proceeds from sale of treasury stock 1,033 526
Proceeds from short-term borrowings 2,400 10,000
Principal payments on short-term borrowings (900) (1,000)
Proceeds from long-term borrowings 16,000 20,000
Principal payments on long-term borrowings - (5,000)
Net increase in federal funds purchased,
repurchase agreements and Federal Reserve discount borrowings 23,776 -
----------- ----------
Net cash provided by (used in) financing activities $ 92,912 $ 31,602
----------- ----------
Net increase (decrease) in cash and cash equivalents ($7,958) ($8,242)
Cash and due from banks, beginning 35,644 43,299
----------- ----------
Cash and due from banks, ending $ 27,686 $ 35,057
=========== ==========
Page 7 of 24
FIRST BUSEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: INTERIM FINANCIAL STATEMENTS
The consolidated interim financial statements of First Busey Corporation and
Subsidiaries are unaudited, but in the opinion of management reflect all
necessary adjustments, consisting only of normal recurring accruals, for a fair
presentation of results as of the dates and for the periods covered by the
financial statements. The results for the interim periods are not necessarily
indicative of the results of operations that may be expected for the fiscal
year.
NOTE 2: LOANS
The major classifications of loans at September 30, 1999 and December 31, 1998
were as follows:
September 30, 1999 December 31, 1998
----------------------------------------
(Dollars in thousands)
Commercial $ 92,120 $ 80,958
Real estate construction 43,292 44,713
Real estate - farmland 15,515 14,184
Real estate - 1-4 family residential mortgage 265,891 246,599
Real estate - multifamily mortgage 57,686 51,888
Real estate - non-farm nonresidential mortgage 202,136 168,948
Installment 38,590 35,919
Agricultural 20,265 19,072
----------------------------------------
$735,495 $662,281
Less:
Allowance for loan losses 7,854 7,101
----------------------------------------
Net loans $727,641 $655,180
========================================
The real estate-mortgage category includes loans held for sale with carrying
values of $2,896,000 at September 30, 1999 and $11,266,000 at
December 31, 1998; these loans had fair market values of $2,925,000 and
$11,373,000 respectively.
Page 8 of 24
FIRST BUSEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: INCOME PER SHARE
Net income per common share has been computed as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
Net income $ 3,454,000 $ 2,989,000 $ 9,751,000 $ 8,701,000
Shares:
Weighted average common shares outstanding 13,602,302 13,765,820 13,639,763 13,771,120
Dilutive effect of outstanding options, as determined
by the application of the treasury stock method 325,042 320,817 324,474 278,929
----------- ----------- ----------- -----------
Weighted average common shares outstanding,
as adjusted 13,927,344 14,086,637 13,967,237 14,050,049
=========== =========== =========== ===========
Basic earnings per share $ 0.25 $ 0.22 $ 0.71 $ 0.63
----------- ----------- ----------- -----------
Diluted earnings per share $ 0.25 $ 0.21 $ 0.70 $ 0.62
----------- ----------- ----------- -----------
NOTE 4: SUPPLEMENTAL CASH FLOW DISCLOSURES FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1999 AND 1998.
1999 1998
--------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 24,069 $24,783
Income taxes $ 4,392 $ 3,368
========= ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Other real estate acquired in settlement of loans $ 170 $ 237
========= ========
Change in unrealized gain (loss) on securities available for sale ($4,922) $ 333
========= ========
Increase (decrease) in deferred income taxes attributable to the
unrealized (gain) on investment securities available for sale
$ 1,465 ($118)
========= ========
Page 9 of 24
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the financial condition
of First Busey Corporation and Subsidiaries ("Corporation") at September 30,
1999 (unaudited) when compared with December 31, 1998 and the results of
operations for the nine months ended September 30, 1999 and 1998 (unaudited) and
the results of operations for the three months ended September 30, 1999 and 1998
(unaudited). This discussion and analysis should be read in conjunction with
the Corporation's consolidated financial statements and notes thereto appearing
elsewhere in this quarterly report.
FINANCIAL CONDITION AT SEPTEMBER 30, 1999 AS COMPARED TO DECEMBER 31, 1998
Total assets increased $99,512,000, or 10.5% , to $1,051,043,000 at September
30, 1999 from $951,531,000 at December 31, 1998.
Securities available for sale increased $6,173,000, or 2.8%, to $224,164,000 at
September 30, 1999 from $217,991,000 at December 31, 1998.
Loans increased $73,214,000 or 11.1%, to $735,495,000 at September 30, 1999 from
$662,281,000 at December 31, 1998, primarily due to increases in commercial and
mortgage loans.
Total deposits increased $59,366,000, or 7.2%, to $886,070,000 at September 30,
1999 from $826,704,000 at December 31, 1998. Non-interest bearing deposits
decreased 3.6% to $93,080,000 at September 30, 1999 from $96,555,000 at December
31, 1998. Interest-bearing deposits increased 8.6% to $792,990,000 at September
30, 1999 from $730,149,000 at December 31, 1998. Short-term borrowings
increased $25,276,000 to $31,176,000 at September 30, 1999, as compared to
$5,900,000 at December 31, 1999. Growth in short-term borrowings is due to
$23,776,000 repurchase agreement entered into by Busey Bank, the Corporation's
bank subsidiary.
In the first nine months of 1999, the Corporation repurchased 207,753 shares of
its Class A stock at an aggregate cost of $4,249,000. The Corporation is
purchasing shares for the treasury as they become available in order to meet
future issuance requirements of previously granted non-qualified stock options.
As of September 30, 1999, 20,930 of the 266,882 options which became exercisable
on January 1, 1997 (and expire December 31, 1999) have not yet been exercised
and 9,300 of the 63,900 options which became exercisable on January 1, 1998 (and
expire December 31, 1999) have not yet been exercised. It is anticipated that
the Corporation may from time to time continue to make purchases of its common
stock in order to meet future issuance requirements.
The following table sets forth the components of non-performing assets and past
due loans.
September 30, 1999 December 31,1998
------------------ ----------------
(Dollars in thousands)
Non-accrual loans $ 615 $ 526
Loans 90 days past due, still accruing 1,894 1,052
Restructured loans - -
Other real estate owned 410 320
Non-performing other assets 11 14
------------------ ----------------
Total non-performing assets 2,930 $1,912
================== ================
Total non-performing assets as a percentage of total assets 0.28% 0.20%
================== ================
Total non-performing assets as a percentage of loans plus non-performing assets 0.40% 0.29%
================== ================
The ratio of non-performing assets to loans plus non-performing assets increased
to 0.40% at September 30, 1999 from 0.29% at December 31, 1998. This was due
primarily to an increase in the balance of loans 90 days past due and still
accruing. Although the non-performing ratios have increased over the last nine
months, the Corporation's ratios compare favorably with those of its peers.
Page 10 of 24
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AS COMPARED TO SEPTEMBER 30, 1998
SUMMARY
- -------
Net income for the nine months ended September 30, 1999 increased 12.1% to
$9,751,000 as compared to $8,701,000 for the comparable period in 1998. Diluted
earnings per share increased 12.9% to $.70 at September 30, 1999 as compared to
$.62 for the same period in 1998.
Operating earnings, which exclude security gains and the related tax expense,
were $9,299,000, or $.67 per share for the nine months ended September 30, 1999,
as compared to $8,228,000, or $.59 per share for the same period in 1998.
The Corporation's return on average assets was 1.33% for the nine months ended
September 30, 1999, as compared to 1.26% for the comparable period in 1998. The
return on average assets from operations of 1.27% for the nine months ended
September 30, 1999 was 8 basis points higher than the 1.19% level achieved in
the comparable period of 1998.
Net interest margin, the Corporation's net interest income expressed as a
percentage of average earning assets stated on a fully taxable equivalent basis,
was 4.16% for the nine months ended September 30, 1999, matching the 4.16% for
the same period in 1998. The net interest margin expressed as a percentage of
average total assets, also on a fully taxable equivalent basis, was 3.88% for
the nine months ended September 30, 1999, compared to 3.86% for the same period
in 1998. Balance Sheet growth, coupled with the lower interest-rate
environment, have contributed to the relatively constant net interest margin.
During the nine months ended September 30, 1999, the Corporation recognized
security gains of approximately $452,000, after income taxes, representing 4.6%
of net income. During the same period in 1998, security gains of $473,000,
after income taxes, were recognized, representing 5.4% of net income.
INTEREST INCOME
- ---------------
Interest income, on a tax equivalent basis, for the nine months ended September
30, 1999 increased 2.3% to $52,495,000 from $51,292,000 for the comparable
period in 1998. The increase in interest income resulted from an increase in
average earning assets of $56,222,000 for the period ended September 30, 1999,
as compared to the same period of 1998. Particularly significant is the large
growth in loan volumes which produce higher yields than the other categories of
interest-earning assets. The increase in interest income due to volume growth
was partially offset by a 32 basis point decrease in the average yield on
interest-earning assets from 8.01% to 7.69% in the current period when compared
to the same period in 1998.
INTEREST EXPENSE
- ----------------
Total interest expense decreased 2.2% for the nine months ended September 30,
1999 as compared to the prior year period. The decrease resulted primarily from
declines on the rates paid on all deposit categories and other short-term
borrowings. These rate decreases were partially offset by volume increases in
money market deposits, fed funds purchased and repurchase agreements, and
long-term debt.
PROVISION FOR LOAN LOSSES
- -------------------------
The provision for loan losses of $900,000 for the nine months ended September
30, 1999 is $200,000 more than the provision for the comparable period in 1998.
The provision and the net charge-offs of $254,000 for the period resulted in the
reserve representing 1.07% of total loans and 268% of non-performing loans at
September 30, 1999, as compared to the reserve representing 1.07% of total loans
and 371% of non-performing loans at December 31, 1998. The adequacy of the
reserve for loan losses is consistent with management's consideration of the
composition of the portfolio, recent credit quality experience, and prevailing
economic conditions.
Page 11 of 24
OTHER INCOME, OTHER EXPENSE AND INCOME TAXES
- --------------------------------------------
Total other income, excluding security gains, increased 15.5% for the nine
months ended September 30, 1999 as compared to the same period in 1998. This
increase is due primarily to growth in trust, service charges on deposit
accounts, other service charges and fees, and net commissions from travel
services. Gains of $759,000 were recognized on the sale of $76,473,000 of
pooled loans for the nine months ended September 30, 1999 as compared to gains
of $656,000 on the sale of $59,090,000 of pooled loans in the prior year period.
Management anticipates continued sales from the current mortgage loan production
of the Corporation if mortgage loan originations are high relative to historic
norms and the sales of the loans are necessary to maintain the asset/liability
structure that the Corporation is trying to effect. The Corporation may realize
gains and/or losses on these sales dependent upon interest rate movements and
upon how receptive the debt markets are to mortgage backed securities.
Total other expense increased 6.4% or $1,434,000 for the nine months ended
September 30, 1999 as compared to the same period in 1998.
Salaries and wages expense increased $608,000 or 6.0%, and employee benefits
expense increased $147,000 or 7.6% for the nine months ended September 30,
1999, as compared to the same period last year. The Corporation had 430 full
time equivalent employees as of September 30, 1999 as compared to 423 as of
September 30, 1998. Occupancy and furniture and equipment expenses increased
29.0% to $4,514,000 for the nine months ended September 30, 1999 from $3,500,000
in the prior year period. Data processing expense decreased $921,000 to
$553,000 for the nine months ended September 30, 1999 from the prior year
period. During September of 1998, Busey Bank converted from an outsourced data
processing solution to an in-house solution. As a result of this change, some
of the costs associated with this function, such as staffing, furniture and
equipment expenses, are included in other expense line items for 1999, while all
costs of the outsourced solution were included in the data processing line
during 1998.
The Corporation's net overhead expense, total non-interest expense less
non-interest income divided by average assets, decreased to 1.80% for the nine
months ended September 30, 1999 from 1.91% in the prior year period as a result
of the income and expense items described above.
The Corporation's efficiency ratio is defined as operating expenses divided by
net revenue. (More specifically it is defined as non-interest expense
expressed as a percentage of the sum of tax equivalent net interest income and
non-interest income, excluding security gains). The consolidated efficiency
ratio for the nine months ended
September 30, 1999 was 61.1% as compared to 62.5% for the prior year period.
When the gains on the sales of pooled loans are excluded, these ratios are 62.3%
and 63.6%, respectively. The change in the current year efficiency ratio is due
to the income and expense items noted above.
Income taxes for the nine months ended September 30, 1999 increased to
$4,287,000 as compared to $3,890,000 for the comparable period in 1998. As a
percent of income before taxes, the provision for income taxes increased to
30.5% for the nine months ended September 30, 1999 from 30.9% for the same
period in 1998.
Page 12 of 24
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 AS COMPARED TO SEPTEMBER 30, 1998
SUMMARY
- -------
Net income for the three months ended September 30, 1999 increased 15.6% to
$3,454,000 as compared to $2,989,000 for the comparable period in 1998. Diluted
earnings per share increased 19.0% to $.25 at September 30, 1999 as compared to
$.21 for the same period in 1998.
Operating earnings, which exclude security gains and the related tax expense,
were $3,304,000, or $.24 per share for the three months ended September 30,
1999, as compared to $2,863,000, or $.20 per share for the same period in 1998.
The Corporation's return on average assets was 1.35% for the three months ended
September 30, 1999, as compared to 1.26% achieved for the comparable period in
1998. The return on average assets from operations of 1.29% for the three
months ended September 30, 1999 is 8 basis points higher than the 1.21% level
achieved in the comparable period of 1998.
The net interest margin expressed as a percentage of average earning assets was
4.07% for the three months ended September 30, 1999, 3 basis points lower than
the level achieved for the like period in 1998. The net interest margin
expressed as a percentage of average total assets was 3.80% for the three months
ended September 30, 1999, matching the 3.80% for the same period in 1998.
During the three months ended September 30, 1999, the Corporation recognized
security gains of approximately $150,000, after income taxes, representing 4.3%
of net income. During the same period in 1998, security gains of approximately
$126,000, after income taxes, were recognized, representing 4.4% of net income.
INTEREST INCOME
- ---------------
Interest income on a fully taxable equivalent basis increased $1,023,000 or 5.9%
for the three months ended September 30, 1999 from the same period in 1998. The
increase resulted from a higher level of interest income on greater average
volumes of loans outstanding for the three months ended September 30, 1999 as
compared to the same period of 1998, partially offset by lower yields on all
categories of interest-earning assets. The yield on interest earning assets
decreased 25 basis points for the three months ended September 30, 1999 as
compared to the same period in 1998.
INTEREST EXPENSE
- ----------------
Total interest expense increased $260,000, or 3.1%, for the three months ended
September 30, 1999 as compared to the prior year period. This increase resulted
primarily from increases in the average volumes of money market and time
deposits, fed funds purchased and repurchase agreements, and long-term debt,
which were partially offset by decreases in the rates paid on savings, money
market and time deposits.
OTHER INCOME, OTHER EXPENSE AND INCOME TAXES
- --------------------------------------------
Total other income, excluding security transactions, increased 16.3% for the
three months ended September 30, 1999 as compared to the same period in 1998.
This was a combination of increased trust revenue, service charges on deposit
accounts, and other service charges and fees. Gains of $239,000 were
recognized on the sale of $20,723,000 of pooled loans for the three months ended
September 30, 1999 as compared to gains of $272,000 on the sale of $21,114,000
of pooled loans in the prior year period.
Total other expense increased 6.0% or $458,000 for the three months ended
September 30, 1999 as compared to the same period in 1998.
Salaries and wages expense increased $222,000 or 6.5% and employee benefits
expense increased $61,000 or 9.8% for the three months ended September 30, 1999,
as compared to the same period last year. Occupancy and
Page 13 of 24
furniture and equipment expenses increased 29.0% to $1,631,000 for the three
months ended September 30, 1999 from $1,264,000 in the prior year period. For
the reasons discussed earlier, data processing expense decreased $313,000 to
$200,000 for the three months ended September 30, 1999 from the prior year
period. Other operating expenses increased $210,000 to $1,474,000 for the three
months ended September 30, 1999 from the prior year period.
The consolidated efficiency ratio for the three months ended September 30, 1999
was 60.4% as compared to 62.9% for the prior year period. When the gains on the
sales of pooled loans are excluded, these ratios are 61.5% and 64.3%,
respectively. The change in the current year efficiency ratio is due to the
income and expense items noted above.
Income taxes for the three months ended September 30, 1999 increased to
$1,437,000 as compared to $1,336,000 for the comparable period in 1998. As a
percent of income before taxes, the provision for income taxes decreased to
29.4% for the three months ended September 30, 1999 from 30.9% for the same
period in 1998.
NEW ACCOUNTING PRONOUNCEMENTS
- -----------------------------
Statement of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities" was issued in June 1998 by the Financial
Accounting Standards Board. The Statement is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. Because the Corporation does
not use derivatives, management does not believe the adoption of the Statement
will have a material impact on the consolidated financial statements.
ACQUISITION ACTIVITY
- --------------------
The Board of Directors of First Busey Corporation (Nasdaq: BUSE) announced
October 29, 1999 that First Busey Corporation has consummated its acquisition of
Eagle BancGroup, Inc. of Bloomington, Illinois. First Busey purchased the
outstanding stock of Eagle for an aggregate cash consideration of approximately
$27.0 million, or $25.74 per share. The acquisition has been approved by all
required regulatory authorities and was approved by the shareholders of Eagle
BancGroup, Inc. at a special stockholders meeting on October 29, 1999.
First Federal currently operates two locations in Bloomington, Illinois, an
office in LeRoy, Illinois, and an office in Lexington, Illinois. First Federal
had total assets of $178 million as of September 30, 1999. Busey Bank currently
has two Banking Centers in McLean County. After the completion of this
acquisition, First Busey's assets will total $324 million in McLean County. The
acquisition will also increase First Busey's market share of deposits in McLean
County to approximately 12%.
REPORTABLE SEGMENTS AND RELATED INFORMATION
- -------------------------------------------
First Busey Corporation has two reportable segments, Busey Bank and First Busey
Trust & Investment Co. Busey Bank provides a full range of banking services to
individual and corporate customers through its branch network in central
Illinois, through its branch in Indianapolis, Indiana, and through its loan
production office in Fort Myers, Florida. First Busey Trust & Investment Co.
provides trust and asset management services to individual and corporate
customers throughout central Illinois.
The Corporation's two reportable segments are strategic business units that are
separately managed as they offer different products and services and have
different marketing strategies.
Page 14 of 24
The segment financial information provided below has been derived from the
internal profitability reporting system used by management to monitor and manage
the financial performance of the Corporation. The accounting policies of the
two segments are the same as those described in the summary of significant
accounting policies. The Corporation accounts for intersegment revenue and
transfers at current market value.
September 30, 1999
-----------------------------------------------------------------------------------
First Busey
Trust & Consolidated
Busey Bank Investment Co. All Other Totals Eliminations Totals
-----------------------------------------------------------------------------------
Interest income $ 51,323 $ 143 $ 80 $ 51,546 $ (1) $ 51,545
Interest expense 23,788 - 288 24,076 $ 20 24,096
Other income 6,574 3,045 13,380 22,999 $ (11,668) 11,331
Net income 9,341 1,045 10,209 20,595 $ (10,844) 9,751
Total assets 1,036,211 3,873 103,430 1,143,514 $ (92,471) 1,051,043
September 30, 1998
-----------------------------------------------------------------------------------
First Busey
Trust & Consolidated
Busey Bank Investment Co. All Other Totals Eliminations Totals
-----------------------------------------------------------------------------------
Interest income $ 49,481 $ 122 $ 808 $ 50,411 $ (12) $ 50,399
Interest expense 23,760 - 855 24,615 $ 19 24,634
Other income 5,825 2,625 12,518 20,968 $ (11,034) 9,934
Net income 8,962 906 9,136 19,004 $ (10,303) 8,701
Total assets 935,093 3,380 123,529 1,062,002 $ (103,452) 958,550
LIQUIDITY
- ---------
Liquidity is the availability of funds to meet all present and future financial
obligations arising in the daily operations of the business at a minimal cost.
These financial obligations consist of needs for funds to meet extensions of
credit, deposit withdrawals and debt servicing.
The sources of short-term liquidity utilized by the Corporation consist of
non-reinvested asset maturities, deposits and capital funds. Long-term
liquidity needs will be satisfied primarily through retention of capital funds.
The Corporation does not deal in or use brokered deposits as a source of
liquidity. The Corporation generally does not rely upon the purchases of
federal funds for liquidity needs. Additional liquidity is provided by bank
lines of credit, repurchase agreements and the ability to borrow from the
Federal Reserve Bank. The Corporation has an operating line with American
National Bank and Trust Company of Chicago in the amount of $10,000,000 with
$3,000,000 available as of September 30, 1999.
The Corporation's dependence on large liabilities (defined as time deposits over
$100,000 and short-term borrowings) increased to 11.4% at September 30, 1999
from 8.4% at December 31, 1998. This is the ratio of total large liabilities
to total liabilities, and is low in comparison to the Corporation's peers. This
increase was due largely to a $32,388,000 increase in time deposits over
$100,000 combined with a $25,276,000 increase in short-term debt.
CAPITAL RESOURCES
- -----------------
Other than from the issuance of common stock, the Corporation's primary source
of capital is retained net income. During the nine months ended September 30,
1999, the Corporation earned $9,751,000 and paid dividends of $4,514,000 to
stockholders, resulting in a retention of current earnings of $5,237.000. The
Corporation's dividend payout for the nine months ended September 30, 1999 was
46.3%. The Corporation's risk-based capital ratio was 12.69% and the leverage
ratio was 7.58% as of September 30, 1999, as compared to 13.66% and 7.89%
respectively as of December 31, 1998. The Corporation and its bank subsidiary
were well above all minimum required capital ratios as of September 30, 1999.
Page 15 of 24
YEAR 2000 COMPLIANCE
- --------------------
The "Year 2000" is an issue due to the fact that computer programmers and other
designers of microprocessor controlled systems have used only the last two
digits to refer to a year. As the calendar moves from December 31, 1999 to
January 1, 2000, systems may be unable to distinguish between the year 1900 and
2000. This could result in inaccurate processing of information that is date
related which could cause a variety of problems for businesses.
First Busey Corporation has appointed a Year 2000 Project Team, headed by a
full-time project coordinator to manage the project. The team members come from
all areas of the organization and have experience with the processes and systems
in use by the organization.
The Corporation's software and hardware systems provide essential support to all
of its businesses. Failure to properly address Year 2000 issues could result in
an adverse affect on the daily operations and financial performance of the
Corporation. Additionally, those on whom Corporation relies or does business
with could also adversely affect the organization if they are not properly
prepared. Given the number of possible scenarios it is virtually impossible to
determine the potential cost of problems should the Corporation's remediation
efforts or the efforts of those with whom it does business not be successful.
In addition should the Corporation fail to make satisfactory progress toward
Year 2000 preparedness or not fully comply with government agency mandated steps
there could be steps taken by state or federal regulators that would adversely
affect the Corporation's business.
The project team has employed a five-step plan to effectively deal with all
aspects of the Y2K issue. The first step is awareness during which the project
was defined. This was followed closely be the assessment phase where all
software, hardware, equipment, physical plant issues and forms were inventoried
and a priority assigned as to the importance in overall operations. Items
included in the physical plant inventory were HVAC systems, security systems,
vaults, and elevators among others.
The third step of the project plan is renovation. This involves making changes
to existing items, elimination of unnecessary items or replacement of items.
During 1997 and early 1998 Busey Bank conducted a search process to select a new
core processing system to replace the system then processed by a third party
vendor. The third party processor undertook a project to consolidate systems
requiring Busey Bank to convert to another of their systems. The bank took this
opportunity to review all options available and select a solution that would be
Year 2000 compliant.
The fourth step of the Year 2000 project plan is validation, which involves
testing all mission critical items. This step was completed as of March 31,
1999. Testing will continue throughout 1999 on non-mission critical systems.
The testing will be done on all systems even those such as the core banking
applications that were purchased as being Year 2000 compliant. Any systems that
have changes made after the initial testing will be re-tested to ensure that
they remain compliant. The Corporation relies on entities such as the Federal
Reserve to conduct banking business. Testing has been done with the Federal
Reserve to ensure that the services used will be available.
The fifth step of the Corporation's Year 2000 project plan is implementation.
This phase involves the review of test results by end users to verify that
performance is as expected. The Corporation has completed all five steps of
the plan as of March 31, 1999.
In addition to the five-step project plan, First Busey Corporation has also
undertaken the challenge to review its customer base and business suppliers for
compliance. Several approaches have been taken to achieve an understanding of
how well prepared these groups are. Questionnaires have been sent to the
Corporation's significant customers and suppliers. These questionnaires were
followed up with personal interviews when questionnaire answers did not provide
clear indications of the entities' preparedness. The Corporation cannot control
the success of any given entity's preparations but is merely trying to have as
complete an understanding as possible about all aspects of its business.
Page 16 of 24
First Busey Corporation has also developed a business continuity plan to
implement should a problem arise. This business continuity plan is complete and
will be tested several times prior to the end of 1999. Five tests have been
completed as of July 14, 1999 and additional tests will be conducted throughout
the remainder of the year. The plan was developed with three scenarios, the
most critical of which is worst case where there would be no utilities of any
kind. The organization has five back-up generators for operating customer
service locations and a large generator to power the data processing center,
which will support the most critical operations functions.
First Busey Corporation has developed an education program in conjunction with
its Year 2000 efforts. The Corporation has provided mandatory training for all
in-house personnel. The Corporation has also taken a leadership role in
educating the community about the Year 2000 issues through public forums, radio
and television sessions, and meetings with community organizations to educate
the people in the county about the Year 2000 issues. Within the last 60 days,
the Task Force has implemented a web-site and telephone system to address
questions related to Year 2000 and the steps being taken to mitigage any
possible problems. It is important that the citizens of the communities which
the Corporation serves understand what the Year 2000 issues are and also
understand the plans and progress that individuals, businesses and government
are making to minimize any negative effects of Year 2000.
First Busey Corporation continues to monitor its liquidity position and has
established a liquidity contingency plan should any unlikely situations occur
which would create a need for additional liquidity.
The estimated expense for Busey's Year 2000 renovation efforts is $155,000. The
cost of in-house personnel that performed testing and other functions for the
Year 2000 project plan is not included, with the exception of the full time Year
2000 Project Coordinator. Of this total figure $67,600 was expensed in 1998.
The remaining amount is for projected expenses not yet incurred. Funding for
these expenses has been including in the operating budget. Expenses related to
the in-house data processing solution conversion are considered to be in the
normal course of business and not Year 2000 related.
MARKET RISK
- -----------
Market risk is the risk of change in asset values due to movements in underlying
market rates and prices. Interest rate risk is the risk to earnings and capital
arising from movements in interest rates. Interest rate risk is the most
significant market risk affecting the Corporation as other types of market risk,
such as foreign currency exchange rate risk and commodity price risk, do not
arise in the normal course of the Corporation's business activities.
The Corporation's lead bank, Busey Bank, has an asset-liability committee which
meets monthly to review current market conditions and attempts to structure the
bank's balance sheet to ensure stable net interest income despite potential
changes in interest rates with all other variables constant.
The asset-liability committee uses gap analysis to identify mismatches in the
dollar value of assets and liabilities subject to repricing within specific time
periods. The Funds Management Policy established by the asset-liability
committee and approved by the Corporation's board of directors establishes
guidelines for maintaining the ratio of cumulative rate-sensitive assets to
rate-sensitive liabilities within prescribed ranges at certain intervals. A
summary of the Corporation's gap analysis is summarized on page 18.
The committee does not rely solely on gap analysis to manage interest-rate risk
as interest rate changes do not impact all categories of assets and liabilities
equally or simultaneously. The asset-liability committee supplements gap
analysis with balance sheet and income simulation analysis to determine the
potential impact on net interest income of changes in market interest rates.
In these simulation models the balance sheet is projected out over a one-year
period and net interest income is calculated under current market rates, and
then assuming
permanent instantaneous shifts in the yield curve of +/- 100 basis point and +/-
200 basis points. These interest-rate scenarios indicate the interest rate risk
of the Corporation over a one-year time horizon due to changes in interest
rates, as of September 30, 1999, is as follows:
Basis Point Changes
----------------------------------
-200 -100 +100 +200
----------------------------------
Percentage change in net interest income due to an immediate
change in interest rates over a one-year period (2.75%) (1.38%) (0.06%) (0.10%)
Page 17 of 24
RATE SENSITIVE ASSETS AND LIABILITIES
- -------------------------------------
Interest rate sensitivity is a measure of the volatility of the net interest
margin as a consequence of changes in market rates. The rate-sensitivity chart
shows the interval of time in which given volumes of rate-sensitive, earning
assets and rate-sensitive interest-bearing liabilities would be responsive to
changes in market interest rates based on their contractual maturities or terms
for repricing. It is, however, only a static single-day depiction of the
Corporation's rate sensitivity structure, which can be adjusted in response to
changes in forecasted interest rates.
The following table sets forth the static rate-sensitivity analysis of the
Corporation as of September 30, 1999.
Rate Sensitive Within
---------------------------------------------------------------------------
1-30 31-90 91-180 181 Days - Over
Days Days Days 1 Year 1 Year Total
---------------------------------------------------------------------------
(Dollars in thousands)
Federal Funds Sold $ 24,700 $ - $ - $ - $ - $ 24,700
Investment securities
U.S. Governments 1,978 17,024 16,928 22,707 104,039 162,676
Obligations of states and
political subdivisions 310 2,391 817 521 36,742 40,781
Other securities 7,153 601 121 305 12,527 20,707
Loans (net of unearned int.) 214,439 51,126 86,199 102,901 280,830 735,495
Total rate-sensitive assets $ 248,580 $ 71,142 $ 104,065 $ 126,434 $ 434,138 $ 984,359
---------------------------------------------------------------------------
Interest bearing transaction
deposits $ 31,214 $ - $ - $ - $ - $ 31,244
Savings deposits 81,766 - - - - 81,766
Money market deposits 289,330 - - - - 289,330
Time deposits 42,623 50,611 105,704 81,219 110,523 390,680
Short-term borrowings:
Federal funds purchased &
repurchase agreements 23,776 - - - - 23,776
Other 7,400 - - - - 7,400
Long-term debt 5,000 - 5,000 1,000 30,000 41,000
---------------------------------------------------------------------------
Total rate-sensitive
liabilities $ 481,109 $ 50,611 $ 110,704 $ 82,219 $ 140,523 $ 865,166
---------------------------------------------------------------------------
Rate-sensitive assets less
rate-sensitive liabilities ($232,529) $ 20,531 ($6,639) $ 44,215 $ 293,615 $ 119,193
---------------------------------------------------------------------------
Cumulative gap ($232,529) ($211,998) ($218,637) ($174,422) ($119,193)
===============================================================
Cumulative gap as a
percentage of total
rate-sensitive assets -23.62% -21.54% -22.21% -17.72% -12.11%
===============================================================
Cumulative ratio (cumulative
RSA/RSL) 0.52 0.60 0.66 0.76 1.14
===============================================================
The foregoing table shows a negative (liability sensitive) rate-sensitivity gap
of $232.5 million in the 1-30 day repricing category. The gap beyond 30 days
becomes slightly less liability sensitive as rate-sensitive assets that reprice
after 30 days are greater in volume than rate- sensitive liabilities that are
subject to repricing in the same respective time periods. The composition of the
gap structure at September 30, 1999, will benefit the Corporation more if
interest rates fall during the next 30 days by allowing the net interest margin
to grow as liability rates would reprice more quickly than rates on interest
rate-sensitive assets. After 30 days through one year, a rate change would have
little effect on the Corporation because the volume of rate-sensitive assets
repricing would be similar to the volume of rate-sensitive liabilities that
would be repricing.
Page 18 of 24
FIRST BUSEY CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND INTEREST RATES
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
1999 1998
---- ----
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
--------- -------- ------- --------- -------- -------
(Dollars in thousands)
ASSETS
Federal funds sold $ 4,990 $ 175 4.69% $ 17,677 $ 729 5.51%
Investment securities
U.S. Government obligations 150,158 6,305 5.61% 169,331 7,320 5.78%
Obligations of states and political
subdivisions(1) 39,735 2,223 7.48% 32,801 1,969 8.03%
Other securities 20,912 690 4.41% 19,493 739 5.07%
Loans (net of unearned interest)(1) (2) 696,302 43,102 8.28% 616,573 40,535 8.79%
------------------- -------------------
Total interest- earning assets $912,097 $ 52,495 7.69% $855,875 $ 51,292 8.01%
======== ========
Cash and due from banks 29,861 31,772
Premises and equipment 24,753 24,200
Reserve for possible loan losses (7,461) (7,255)
Other assets 19,533 18,062
--------- ---------
Total Assets $978,783 $922,654
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing transaction deposits $ 12,479 $ 157 1.68% $ 11,356 $ 169 1.99%
Savings deposits 84,266 1,888 3.00% 80,624 1,996 3.31%
Money market deposits 301,899 6,702 2.97% 273,139 6,150 3.01%
Time deposits 344,625 13,216 5.13% 351,571 14,526 5.52%
Short-term borrowings:
Federal funds purchased and
Repurchase agreements 12,921 525 5.43% 1,112 44 5.29%
Other 6,270 308 6.57% 15,000 857 7.64%
Long-term debt 31,637 1,300 5.49% 21,721 892 5.49%
------------------- -------------------
Total interest bearing liabilities $794,097 $ 24,096 4.06% $754,523 $ 24,634 4.37%
======== ========
------- -------
Net interest spread 3.63% 3.64%
======= =======
Demand deposits 90,768 79,451
Other liabilities 7,817 7,893
Stockholders' equity 86,101 80,787
--------- ---------
Total Liabilities and Stockholders' Equity $978,783 $922,654
========= =========
Interest income / earning assets(1) $912,097 $ 52,495 7.69% $855,875 $ 51,292 8.01%
Interest expense / earning assets $912,097 $ 24,096 3.53% $855,875 24,634 3.85%
----------------- -----------------
Net interest margin(1) $ 28,399 4.16% $ 26,658 4.16%
================= =================
<FN>
(1) On a tax-equivalent basis, assuming a federal income tax rate of 35% for 1999 and 1998.
(2) Non-accrual loans have been included in average loans, net of unearned interest.
Page 19 of 24
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CHANGES IN NET INTEREST INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Change due to (1)
Average Average Total
Volume Yield/Rate Change
--------------------------------
(Dollars in thousands)
Increase (decrease) in interest income:
Federal funds sold ($458) ($96) ($554)
Investment securities:
U.S. Government obligations (810) (205) (1,015)
Obligations of states and political
subdivisions(2) 374 (120) 254
Other securities 63 (112) (49)
Loans(2) 4,683 (2,116) 2,567
--------------------------------
Change in interest income(2) $ 3,852 ($2,649) $ 1,203
--------------------------------
Increase (decrease) in interest expense:
Interest bearing transaction deposits $ 21 ($33) ($12)
Savings deposits 98 (206) (108)
Money market deposits 637 (85) 552
Time deposits (283) (1,027) (1,310)
Short-term borrowings:
Federal funds purchased and repurchase
agreements 480 1 481
Other (442) (107) (549)
Long-term debt 407 1 408
--------------------------------
Change in interest expense $ 918 ($1,456) ($538)
--------------------------------
Increase in net interest income(2) $ 2,934 (1,193) $ 1,741
================================
<FN>
(1) Changes due to both rate and volume have been allocated proportionally.
(2) On a tax-equivalent basis, assuming a federal income tax rate of 35% for 1999 and 1998.
Page 20 of 24
FIRST BUSEY CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND INTEREST RATES
QUARTERS ENDED SEPTEMBER 30, 1999 AND 1998
1999 1998
------------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------------------------------------------------------------
(Dollars in thousands)
ASSETS
Federal funds sold $ 1,334 $ 17 5.06% $ 9,536 $ 133 5.53%
Investment securities
U.S. Government obligations 159,708 2,239 5.56% 170,732 2,470 5.74%
Obligations of states and political
subdivisions(1) 40,366 761 7.48% 33,444 666 7.90%
Other securities 21,095 236 4.44% 21,587 246 4.52%
Loans (net of unearned interest)(1) (2) 726,059 15,128 8.27% 632,909 13,843 8.68%
--------------------- -------------------
Total interest earning assets $ 948,562 18,381 7.68% $868,208 $ 17,358 7.93%
======== ========
Cash and due from banks 30,801 32,248
Premises and equipment 24,807 25,080
Reserve for possible loan losses (7,702) (7,316)
Other assets 20,626 19,490
----------- ---------
Total Assets $1,017,094 937,710
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing transaction deposits $ 11,065 59 2.12% $ 11,422 $ 59 2.05%
Savings deposits 82,645 616 2.96% 80,900 678 3.32%
Money market deposits 303,605 2,274 2.97% 283,673 2,213 3.10%
Time deposits 360,914 4,671 5.13% 347,998 4,810 5.48%
Short-term borrowings:
Federal funds purchased and 28,319 398 5.58% 2,760 36 5.17%
repurchase agreements
Other 6,625 105 6.29% 15,550 291 7.42%
Long-term debt 37,522 520 5.50% 21,522 296 5.46%
--------------------- -------------------
Total interest bearing liabilities $ 830,695 $ 8,643 4.13% $763,825 $ 8,383 4.35%
======== ========
Net interest spread 3.56% 3.58%
======= =======
Demand deposits 92,981 80,135
Other liabilities 7,668 8,439
Stockholders' equity 85,750 85,311
----------- ---------
Total Liabilities and Stockholders' Equity $1,017,094 $937,710
=========== =========
Interest income / earning assets(1) $ 948,562 $ 18,381 7.68% $868,208 $ 17,358 7.93%
Interest expense / earning assets $ 948,562 8,643 3.61% 868,208 8,383 3.83%
----------------- -----------------
Net interest margin(1) $ 9,738 4.07% $ 8,975 4.10%
================= =================
<FN>
(1) On a tax-equivalent basis, assuming a federal income tax rate of 35% for 1999 and 1998.
(2) Non-accrual loans have been included in average loans, net of unearned interest.
Page 21 of 24
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CHANGES IN NET INTEREST INCOME
QUARTERS ENDED SEPTEMBER 30, 1999 AND 1998
CHANGE DUE TO (1)
Average Average Total
Volume Yield/Rate Change
---------------------------------
(Dollars in thousands)
Increase (decrease) in interest income:
Federal funds sold ($105) ($11) ($116)
Investment securities:
U.S. Government obligations (156) (75) (231)
Obligations of states and political
subdivisions(2) 128 (33) 95
Other securities (6) (4) (10)
Loans(2) 1,895 (610) 1,285
---------------------------------
Change in interest income(2) $ 1,756 ($733) $ 1,023
---------------------------------
Increase (decrease) in interest expense:
Interest bearing transaction deposits ($2) $ 2 $ -
Savings deposits 15 (77) (62)
Money market deposits 141 (80) 61
Time deposits 194 (333) (139)
Short-term borrowings:
Federal funds purchased and repurchase
agreements 358 4 362
Other (146) (40) (186)
Long-term debt 222 2 224
---------------------------------
Change in interest expense $ 782 ($522) $ 260
---------------------------------
Increase in net interest income (2) $ 974 ($211) $ 763
=================================
<FN>
(1) Changes due to both rate and volume have been allocated proportionally.
(2) On a tax-equivalent basis, assuming a federal income tax rate of 35% for 1999 and 1998.
Page 22 of 24
PART II - OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K
(a) There were no reports on Form 8-K filed during the three months
ending September 30, 1999.
Page 23 of 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST BUSEY CORPORATION
(REGISTRANT)
By: //Douglas C. Mills//
--------------------
Douglas C. Mills
Chairman of the Board
By: //Barbara J. Jones//
--------------------
Barbara J. Jones
Chief Financial Officer
Date: November 15, 1999
Page 24 of 24